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Why is everyone a bank?

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Re: Why is everyone a bank?

#161

Post by kaushikktiwari »

thundergolfer wrote: post #142
Apocryphon wrote: post #76

Earlier quoted context omitted.

As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fant…

That’s an interesting perspective. Related to it, I often feel like entrepreneurs in tech don’t realise how much their innovation is restricted by capital markets. OP’s startup is actually a great example of this. Medical debt is indeed a troubling problem in the USA, but OP’s solution is yet another financial product, something that can get funded. VCs can’t fund single-payer healthcare policy entrepreneurship even…

That's a very good point! I agree!

Re: Why is everyone a bank?

#162

Post by MetalGuru »

superfrank wrote: post #134
ProAm wrote: post #32

Earlier quoted context omitted.

> Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement.

> Do you think Google is going to do any better at this? Google's new checking account isn't really Google. They don't currently have the licenses needed to act as a bank. It's basically a Google branded checking account from Stanford Federal Credit Union. From what I've read, Google's checking account will be similar to Uber's credit card in that you will sign up and get some benefits through Google/Uber, but pretty…

And this is intentional. Google definitely doesn’t want to be regulated as a bank. It just wants your financial data, so it can send better targeted ads.

Re: Why is everyone a bank?

#163

Post by anongraddebt »

ProAm wrote: post #32
tlb wrote: post #4

Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…

> Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement.

The traditional banking system is about 150 years old by now. Increasingly, it seems to serve a smaller segment of society, regardless of its half-hearted attempts at innovation.

I have a number of friends working in finance. Lovely people. Absolutely arrogant, though, when it comes to the question of whether their industry will face non-trivial disuption.

Maybe Google and other current tech giants will not be the ones, but someone is going to come along, take a chunk out of financial services, and start the ball rolling on a non-trivial amount of disruption in that space.

I often see people questioning why others would want a new finance/banking system. Yes, the traditional one has some negatives, but how could you want something almost completely new?

I think this line of questioning misses the phenomenon underway. The banking system works for well for me, so it can seem counterintuitive to see people pushing for quite major changes. But, clearly enough people are fed up that things are starting to move in that direction. At what point do I just say, "does it matter whether these people can provide a litany of reasons?"

Either traditional players sack up and satisfy current and potential customers, or someone else will.

Re: Why is everyone a bank?

#165

Post by salawat »

beatgammit wrote: post #95
tlb wrote: post #4

Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…

I wanted to build a product based on moving money around, and it seemed like it would be easier to start my own than to get what I wanted at a reasonable price. The financial industry is needlessly complicated and I don't know why it's so hard to just move money around. I can write checks easily and even manually set up recurring ACH transfers, so why can't I automate that with an API? There are a couple companies th…

The financial industry is difficult because of money laundering.

Any illegal activity requires a financial crime at some point to launder the spoils. Therefore, financial institutions are the perfect place for law enforcement to hook into to try to crack down on the more widespread and organized forms of crime. The financial system is so much of a force multiplier for criminal activity that LE can't really ignore it.

To hook in, they need you to do KYC, they need you to check with OFAC, they need you to do you to do SAR's and report any attempts to structure financial activity. Basically, actors in the financial services industry, as a prereq to being able to do so, have to agree to act as a modern day Stasi.

Thank the criminals and reactionary Congressfolk of the last fifty or so years.

Re: Why is everyone a bank?

#166

Post by Gibbon1 »

Sophistifunk wrote: post #164

Is that a trick question? it's because banks get to make money without doing any work. It's a wonderful position to be in, the middle-man who just takes a cut of everybody else's transactions.

In 2009 the Fed tore down the wall between retail and investment banks. Which allowed the Fed to pump the latter full of cash. Stands to reason that every other large non-finance corporation wants to get in on that.

Re: Why is everyone a bank?

#167

Post by qaq »

beatgammit wrote: post #95
tlb wrote: post #4

Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…

I wanted to build a product based on moving money around, and it seemed like it would be easier to start my own than to get what I wanted at a reasonable price. The financial industry is needlessly complicated and I don't know why it's so hard to just move money around. I can write checks easily and even manually set up recurring ACH transfers, so why can't I automate that with an API? There are a couple companies th…

If you think it is easy to charter a bank you are in for a huge surprise. Credit Union might be an option though.

Re: Why is everyone a bank?

#168

Post by mrb »

__MatrixMan__ wrote: post #45
tlb wrote: post #4

Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few). It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being co…

«why not cut out the middlemen and be the only parasite in the loop?»

Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.

Re: Why is everyone a bank?

#169

Post by plorkyeran »

kjs3 wrote: post #145
mmanfrin wrote: post #135

Earlier quoted context omitted.

> Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement. Absolutely. I say this as someone who is still angry with them over Reader. I don't trust Google, but I trust them a hell of a lot more than Wells Fargo, Bank of America, et al.

Really? Wells Fargo isn't mining my search history using a black-box algorithm to decide without transparency whether to close my account or decline a transaction because I might have become a risk of some sort. Not that they would ever do such a thing.

I'd rather have my bank abruptly close my account for opaque reasons than fraudulently open additional accounts in my name.

Re: Why is everyone a bank?

#170

Post by kccqzy »

> It also happens to be an incredibly sticky product. Think of the last time you saw an overdraft charge on your statement and swore to yourself that this was the last straw — you are taking your business elsewhere only to be confronted with the downstream effects of moving your “financial address” — telling HR where to send the next paycheck, calling up each utility company, changing autopay for each credit card bill and so forth!

Here's the thing. The stickiness of a bank is only a mental illusion. If you actually rationally calculate the time it takes to switch a bank, it's not that bad. Changing where the next paycheck is deposited takes five minutes. Changing where each credit card autopay draws money from takes five minutes. Once you have resolved to leave a bank, it probably takes about an hour to actually do it. (And for typical Americans that one overdraft fee is well more than an hour's worth of salary.)

I find this interesting because it illustrates the difference between the mental workload and the actual workload can be great. Coming up with a checklist of a dozen places to change the routing and account number seems overwhelming. It is actually not.

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